The official blog of Illinois Issues magazine,
published by the Center for State Policy and Leadership
at the University of Illinois Springfield

Wednesday, May 25, 2011

Legislators start final push on big issues

By Jamey Dunn and Lauren N. Johnson

With less than a week before their adjournment deadline, Illinois lawmakers are making final attempts to get several large proposals passed in the last days of regular session.

Pension benefits
House Minority Tom Cross submitted his proposal today to reduce future retirement benefits for current state employees. According to Cross' spokesperson, Sara Wojcicki, he plans to present his amendment to Senate Bill 512 in a House committee tomorrow morning. Under the proposal, current employees would be able to keep the benefits they have already earned. But starting July 1, 2012, they would have to pick one of three plans that call for larger contributions or reduced benefits. Employees could stay in their current defined benefits plan, but their contributions would increase:

State Employees’ Retirement System (SERS) State employees who will also receive Social Security benefits currently contribute 4 percent of their salaries. Under the proposal, they would have to pay 9.29 percent. Members of SERS who do pay into Social Security now contribute 12.5 percent of their pay. They would have to kick in 18.91 percent under the proposal.State Employees’ Retirement System Alternative Plan Members of the alternative SERS system, which includes workers with potentially dangerous jobs, such as prison guards, and who also have an earlier retirement age, contribute 8.5 percent of their salaries now, if they also pay into the Social Security system. Under Cross’ plan, they would have to chip in 16.65 percent of their pay. Those who will not get Social Security pay 12.5 percent of their salary now and would have to pay 18.91 percent.

Teachers’ Retirement System (TRS) Illinois teachers, except Chicago teachers, currently pay 9.4 percent of their salary and will not receive Social Security benefits. Under the bill, they would have to contribute 13.77 percent. Chicago teachers would see their contributions increase from 9 percent of their pay to 12.75 percent.

State University Retirement System (SURS) University employees currently contribute 8 percent of their pay. Under the proposed change, they would pay to 15.31 percent.

General Assembly Retirement System (GARS) Legislators currently contribute 11.5 percent of their income to retirement benefits. They would pay 24.89 percent under the proposed legislation.

Judges Retirement System (JRS) Judges kick 11 percent of their pay into their retirement. Under Cross’ plan, they would pay 34.04 percent. Lawmakers reportedly considered leaving judges out of the plan, but according to Wojcicki , they will be included in Cross’ proposal.

The amount that employees would have to pay to stay in their current benefit plans would be recalculated every three years.

Under Cross' amendment, employees could also opt to move down to “tier two” of the system — which was passed by legislators in one day during last year’s legislative session — and applies to all employees hired after January 1 of this year. Or they could choose to participate in a self-managed plan, similar to a 401K. Under the self-managed plan, employees who would collect Social Security would contribute 6 percent of their salary, and those who would not would contribute about 4 percent. The state would match those contributions

Employees who chose the old benefits could opt to switch when the rates they must pay are refigured every three years. If they left the so-called tier one plan, they could not return to it but would keep all the benefits they earned under it.

Senate President John Cullerton has said he believes changes to current employee benefits would be unconstitutional. However, he has vowed to call the bill for a floor vote in the Senate if it passes in the House.

Borrowing
A Senate committee today approved a plan to borrow about $6 billion spread out through four proposals to pay down the state’s unpaid bills to vendors, schools, hospitals and local municipalities. “In some instances, those bills are months and months old; in some cases they are over a year old. So, a tremendous backlog of unpaid bills,” said Sen. John Sullivan, a Rushville Democrat who is backing the legislative package.

Sullivan sponsored four Senate bills that make up the plan and total $6.17 billion:

SB 342 would pay $1.5 billion owed to state vendors, non-governmental entities and private businesses. Sullivan said vendors have had to take out lines of credit, cut jobs and reduce their services as result of late payments or nonpayment.

SB 343 would address payments owed amounting in $1.1 billion for health care providers whom the state contracts with for its group health insurance programs.

SB 344 would restructure debt for private businesses waiting to be paid their corporate tax refunds by paying $800 million to the sector.

SB 345 would provide the largest amount of money from the state to school districts, universities, community colleges and local units of government, amounting in $2.7 billion. Schools say that have had to make layoffs and cut programs as result of unpaid bills from the state.

Sullivan said his plan would pay off the bonds over the next seven years using money from the recent income tax increase. It would cost the state about $804 million in interest. “Even though it’s slightly different from the variation that we proposed three weeks ago, we think it makes a lot of fiscal sense and economic sense,” said Gary Plummer, president of the Springfield Chamber of Commerce, a group that suggested a similar plan almost a month ago. “It will allow the state to make good on past due bills owed for goods and services provided by agencies and vendors in good faith throughout the state.”

Although, the plan differs from an earlier borrowing proposal by Gov. Pat Quinn that called for borrowing $8.7 billion to be repaid over 14 years, Kelly Kraft, spokeswoman for the governor’s office, said Quinn has remained flexible with his proposal and supports Sullivan’s plan. “Overall, when you’re dealing the budget, it’s a negotiation process, so there’s give and take throughout. So this is something that we do talk about with legislators, as well as the budget,” Kraft said. “We just want to come up with the best plan for everyone.”

However, the plan will need Republican support in each chamber to get the required super majority needed for the state to borrow. Senate Republicans, who have opposed additional borrowing, agree that individuals and businesses owed by the state should be paid in a timely matter but suggest that there are other ways to address the backlog. Sen. David Luechtefeld, an Okawville Republican, remarked: “Yes, you want your money, but it’s not going to be too long before those bills are going to go right back up because there’s no way to pay them anymore. We’ve borrowed too much.” Cullerton said Senate Democrats are looking for the Republican backing needed to pass the borrowing plan. “That will take some time,” he said.

Energy
House members are supporting a new version of a controversial proposal that would allow utility companies to raise rates while also requiring them to invest in infrastructure, as well as a proposal to build a coal plant that would utilize carbon emission reducing technology.

SB1652 would allow Commonwealth Edison and Ameren, the state's largest electric utilities, to increase customers’ rates by up to 2.5 percent annually and would require both companies to invest a combined $3.2 billion in infrastructure to upgrade the existing electric gird and add so-called smart grid technology. Unlike in previous incarnations of the plan contained in House Bill 14, the Illinois Commerce Commission, which currently has to sign off on rate hikes, would decide on the increases.

The measure would also require utilities to meet benchmarks for customer service and reliability. The ICC would monitor the progress, and the utilities would face fines if they failed to meet the goals. The ICC would also review rates in 2014, and the entire bill would sunset in 2017, meaning lawmakers would have to approve it again.

David Kolota, executive director of the Citizens Utility Board, said the changes to the proposal are encouraging, but he said the customer-service benchmarks may be set too low.

On the policy front, on smart grid policy, it’s definitely a significant step forward,” said Kolota, whose consumer advocacy group opposed the original plan. “All [the previous plan] said was, ‘We’re going to do smart grid.’ It was like one sentence.” He said he is concerned that the rate cap is only in place until 2014. “We certainly wouldn’t want to see a situation where consumers are soaked and suddenly get hit with a significant rate increase.”

Orland Park Democratic Rep. Kevin McCarthy, a sponsor of the bill, acknowledged that the changes will not be enough to please all stakeholders. “I don’t pretend that these changes are everything some of our colleagues wanted.”

Sen. Mike Jacobs, an East Moline Democrat who sponsors the bill in his chamber, said the benefits that customers will see in future savings, as well as in more reliable power, are worth the up-front investment of higher rates,which sponsors estimate will average about $3 per household each month. “You can’t base this off price. That’s kind of silly. We’re dealing with hundred-year-old technology, and if consumers want something to work, they’ve go to pay for it. And the fact is, it costs money, and you know there’s nothing for free. My cable bill went up $10 a month last month nobody even asked me if they could raise it,” Jacobs said.

The changes were not enough to win the support of one vocal opponent, Attorney General Lisa Madigan. “A day after winning a $156 million rate increase, ComEd just can’t help itself. Today, their legion of lobbyists continue to push legislation that will require consumers to fund billions more in guaranteed profits. This new proposal is just more of the same — a plan that hits consumers where it hurts the most — their wallets,” Madigan said in a written statement. The ICC approved a ComEd Rate increase yesterday. Gov. Pat Quinn, who vowed to veto the earlier version of the plan, declined to weigh in on today’s proposal.

“If you want to vote in this General Assembly, run for the office,” Jacobs said in response the Madigan’s opposition.

Meanwhile, the attorney general did throw her support behind an attempt to resurrect a plan to help Tenaska Energy build a “clean-coal” plant near Taylorville. Paul Gaynor, chief of the Public Interest Division of the attorney general’s office, said that the Tenaska plant is a better investment for Illinois utility customers, calling the plan rate neutral. Energy generated by the plant would initially come at a greater cost, but supporters say that a provision giving the Illinois Power Authority more flexibility in purchasing power would result in savings that could negate any substantial rate increase.

Northbrook Democratic Rep. Elaine Nekritz, one of the House sponsors of SB 1653, said she hopes to get the plan through both chambers before the end of the regular session on Thursday.

Budget
Senate President John Cullerton said that the House and Senate are working to bring their proposed budget numbers in line and that a vote could come over the weekend. He said the Senate will likely come down to the House’s revenue estimate, which is $1 billion less than the estimate contained in the budget proposal passed by the Senate. Echoing House Speaker Michael Madigan, Cullerton said revenue that comes in beyond the estimate could be used to pay off overdue bills.

Workers' compensation
A House committee approved SB1933, which would repeal the current worker’s compensation system. House Democrats, including Speaker Madigan, have threatened to destroy the current system if stakeholders cannot agree on a reform package. The legislation would force any worker's compensation claims into the courts. The bill is sponsored by Marion Democratic John Bradley, who has been working on negotiations. Bradley said that the passage of the bill was not a indication that talks had fallen apart, but said he wanted to keep all options open. Cullerton said, “I think we’re really close to an agreement on workers’ comp — an agreement on workers’ comp among a number of the stakeholders.”

Redistricting
Cullerton also said he expects some changes to the Senate Democrats’ proposed legislative map to surface tomorrow and that the proposed map of congressional districts would come sometime after that.

Tomorrow is expected to be a busy day for the legislature. Check back for updates.

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The bureau follows state government from the Capitol Press Room and writes articles for Illinois Issues magazine, published by the Center for State Policy and Leadership at the University of Illinois at Springfield.
Contact: illinois.issues@gmail.com